A broker reacts at Calcutta Stock Exchange in Kolkata as Sensex crashes on Friday. PTI

Sanjeev Sharma

Tribune News Service

New Delhi, September 4

With the BSE Sensex posting a worst weekly loss in 4 years and sliding to a 14-month low, analysts say apart from the global jitters arising out of China slowdown and US interest rate hike, slow movement on reforms front in India is also disappointing investors.

The stock markets continued to crash and the BSE Sensex tanked over 562 points to 25,201 points, its weakest closing in nearly 14 months. This is the worst loss for the Sensex in four years. Investor wealth slumped by Rs 1.92 lakh crore today.

Today’s fall is being attributed to renewed fear of a US interest rate hike with jobs data expected to be strong, emerging markets are at risk of more outflows as capital would move towards the safety of US debt.

The prospect of a higher US rate is keeping emerging markets on tenterhooks and it has reached a stage when countries are telling the US to go ahead and do as they are prepared for it rather than prolong the uncertainty. In one sense, an interest rate decision in the US has become probably the most important economic variable in the global markets.

In weekly terms, the Sensex turned weaker by 1,190.48 points, or 4.51%, and Nifty retreated 346.90 points, or 4.33%. This is the fourth straight weekly plunge for both the indices.

Analysts said domestic factors are also playing a role in the market fall. Sanjeev Zarbade, vice- president, Private Client Group Research, Kotak Securities, said in the recent weeks, global equities have been impacted by sudden devaluation of its currency by China and signals of an economic slowdown.

“As far as India is concerned, the delay in passing key reforms has also contributed to the disappointment among investors”, he said.

An interest rate hike in the US will hit emerging markets. “Going forward, the US August jobs data, which is slated to be released today, would be closely watched as a strong reading would bolster the case for a rate hike. Given the weak investor sentiment that is prevalent currently, a rate hike may not go down well with most emerging markets”, he added.

Vivek Gupta, Director Research, CapitalVia Global Research, said the sharp fall was triggered by a selloff in global markets and slowdown in China’s economy.

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